Tracking error and reconstitution

[CaliforniaDreaming]

If a portfolio is reconstituted less frequently, the tracking error is higher.
With reconstitution: so, you remove or replace stocks that no longer fit the index.
When doing this less frequently, your tracking error increases, because the index reconstitutes more often, so you deviate more from it? Thank you!

[fino_abama]

@CaliforniaDreaming

When doing this less frequently, your tracking error increases, because the index reconstitutes more often, so you deviate more from it?

Yes, you’re right.